Energy Reform in Mexico From independence in 1821 to current reform May 6, 2014 1
Mexico Eagle Ford Shale
1519 1521 Spanish explorer Hernan Cortes conquers Central Mexico.
The war mainly benefited the minority Criollo (Spanish-blooded upper class) 1821 200 years after Cortez s conquest by Cortez, Mexico wins independence from Spain.
1824 Three years after Mexico achieved its independence few imagined that the country would soon become a federal republic establishing its own constitucion.
1856 Price of oil $25 per barrel 1859 George Bissell and Edwin L. Drake discovered oil, at Oil Creek near Titusville, Pennsylvania. (63 feet) 1860 January price of oil $0.58
1860 s Oil and gas exploration began in Mexico
1857 The Constitution of 1857 was a liberal constitution drafted during the presidency of Ignacio Comonfort establishing individual rights.
Freedom of speech Freedom of conscience Freedom of the press Freedom of assembly Right to bear arms Reaffirmed the abolition of slavery Eliminated debtor prison Eliminated all forms of cruel and unusual punishment, including the death penalty.
1867 1871 Juarez was President of Mexico 1871 Juaerz seeks re-election, with no clear winner Congress chose Juarez. Amidst the Diez rebellion, Juarez died of a heart attack. 1872 Lerdo elected President. 1876 Lerdo runs for re-election, Diez rose in rebellion A second time in 1876, Diez occupied Mexico City and held power for the next thirty four years.
1901 Commercial production was established. 1910 Prospectors had identified reserves near the Central Gulf of Mexico coast town of Tuxpán. Systematically the efforts of foreign countries (mainly American) came to supersede the uncoordinated efforts of speculative prospectors and Mexico became an oil exporting nation in????
Late 1910 Franscio Madero, while in exile, drafted the Plan de San Luis Portosi. Embraced by the rebel movement, this plan called for the resteration of the constitution, replace dictator Diez and establish a democratic republic. 1911 Diez resigned and left the country and Madero was elected president. 1913 Madero was assassinated by Victoriano Huerta, commander of the federal forces. Huerta dissolved the congress and assumed power.
Francisco Poncho Villa Success in battles across the northern state of Chihuahua led by Poncho Villa sparked uprising across the country
Zapata recruited thousands of peasants to fight for land reform and supported the "El Plan de Ayala". This plan called for a redistribution of land back to the peasants. Zapata From the south of Mexico the Zapatistas motto was "the land is for those who work it" (la tierra es pada el que la trabaja)
1914 Huerta faced heavy opposition. The United States sent marines to Vera Cruz and after losing several battles Huerta resigned, and left the country. Venustiano Carranza, a wealthy landowner and Chief of the northern Coalition gathered revolutionary and military leaders to determine the future of Mexico. Zapata and his followers, supporting land reform, opposed Carranza. Carranza ignored the promises of the constitution of 1917 and was assassinated.
1910 The Mexican revolution grew out of a belief that a few wealthy landowners could not continue the ways of Spanish Colonial rule; instead the land should belong to those who actually worked it and extracted its wealth through their labor.
1910 The dictator Porfirio Diez' had been in power for 34 years and had essentially ignored the principles and ideals of the Constitution of 1857. These reforms were contrary to the interests of the Catholic Church 1911 May 25 Mexican President Porfirio Díaz resigned and left the country.
1911 Francisco I. Madero, author of the Plan of San Luis became president of Mexico 1913 Madero was assassinated in early by a commander of the federal forces, Victoriano Huerta,
In late 1910, Francisco I. Madero, in exile for his political activism, drafted the Plan de San Luis Potosí (Plan of San Luis Potosí), which was widely distributed and embraced by rebel movements across the nation. In this plan, Madero called for an uprising starting on November 20th, 1910, to restore the Constitution of 1857 and replace dictator Díaz with a provisional government.
1917 The constitution of 1917 established certain rights for the Mexican people, however, granted the Mexican government the permanent and complete rights to all subsoil resources.
1925 President Plutarco Elías Calles decreed that foreign oil companies must register their titles and limited their concessions to fifty years.
1930 Production had fallen to just 20% of its level in 1921.
1932 Discovery of the Poza Rica field near Veracruz would become Mexico's main source of petroleum for the next several decades.
1938 President Lazaro Cardenas expropriated U.S., British and Dutch oil companies (Nationalization)
2013 President Enrique Pena Nieto announced the Mexican Senate approved the most far-reaching oil reform if 75 years.
Mexico s 2013 Oil Reform In no way privatization Not concessions, not a popular term Allows demotic and foreign companies to explore and develop Will permit profit-sharing contracts, production sharing contracts and licenses (a euphemism for concessions). Percentage yet to be determined Pemex will cease to have the monopoly on exploration, production and refining
Points of Reform Pemex will need to compete New regulatory framework Bid Process for contracts Transparency in financial reporting The states can take advantage of growth
Timeline of Reform December 20th, 2014 Round Zero for Pemex (90 days after reform) Pemex submitted it s list fields it wishes to operate Secondary Reforms (120 days after reform) Congress has until May 20 th to complete secondary legislation Approved April 30, 2014, it will take a few weeks to understand Round Zero resolution (270 days after reform) Energy department has until 3 rd week of September to announce decisions on Pemex s round Zero request Environmental regulation (365 days after reform) Congress has until December 2014 to craft new environmental regulations Gas Control Center and Energy Control Center (485 days after reform) Until April 2015 to create these centers
Timeline of Reform 2015 - Round One Government will announce which fields will be offered for bid Conditions of bidding will be announced
Tax Questions How will the tax rate change? (Pemex taxed at 100% + -) Will there be a corporate income tax? How much is the surface rental fees on idle oil and gas acreage? Is there a dividend payable to the government?
Why Reform? Declining production (25% since 2004) Pemex estimates exploration cost in excess of $60B/yr verses $24B currently Increased demand 30% of the governments income if from taxes on oil Unexplored reserves in Eagleford & Gulf of Mexico
Mexico Eagle Ford Shale